Saudi Arabia: Riyal funding drives rapid progress in projects

Delayed aluminium and petrochemicals mega-projects move forward; Few alternatives for local lenders

Key Saudi project financings are rapidly moving ahead after long delays. This is largely because local banks are desperate to deploy riyal funding in more profitable ways as the benchmark interest rate remains at just 2% and there is a lack of lending opportunities outside project finance. With the riyal pegged to the dollar, interest rates are low despite local housing shortages and global food prices pushing Saudi inflation to a 17-month high this summer at 6%.

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